Investing in stocks or ETFs will be good enough for most investors, but there’s certainly a lot of value in exploring all the opportunities available on the market. Alternative investments can provide some much needed diversification and can potentially bring higher returns than traditional investment types.
In this article, we’ll showcase the best alternative investment platforms. We paid special attention to accessibility, and our list mostly consists of platforms that can be accessed by retail investors. We also attempted to include a broad range of alternative investment types.
What are alternative investments?
“Alternative investments” is a broad term referring to investments other than traditional investments such as stocks, bonds and cash. Some examples of asset classes that fall under the alternative investments umbrella include:
- Real estate
- Private equity
- Commodities
- Private debt
- Collectibles
- Cryptocurrencies
Alternative investments are worth exploring since they tend to have low correlation to standard asset classes. Therefore, they can provide additional diversification to an investment portfolio. Alternative investments often also have the potential for higher returns than traditional investments.
However, alternative investments tend to be more risky and also have lower liquidity than traditional investments. Converting an alternative investment back to cash is much more inefficient compared to, for example, selling a stock through your broker. It’s also important to keep in mind that alternative investments can have relatively high minimum investment requirements and substantial fees.
Although alternative investments have typically been associated with accredited investors, they’re gradually becoming more accessible to retail investors as well.
The best alternative investment platforms
Below, you’ll find a selection of 7 alternative investment platforms that covers a wide range of alternative investment types.
- Public – A platform with a comprehensive suite of investment products, ranging from traditional to alternative
- Yieldstreet – Alternative investment platform with a broad spectrum of investment options
- Equitybee – Get exposure to pre-IPO startups
- Fundrise – Venture capital opportunities, private credit and real estate
- Percent – Invest in private credit deals
- Masterworks – Buy shares in paintings from famous artists
- Vinovest – Invest in wine and whiskey
1. Public
Public is an online investment platform that gives investors access to a wide selection of investments, ranging from traditional to alternative investments. In this overview, we’ll focus on Public’s offering of alternative investment products.
On Public, users can invest in fractional shares representing various alternative assets. This includes sought-after artworks, rare sneakers, trading cards and other types of assets that are typically only accessible to wealthy investors. Recently, Public has launched a product that allows users to invest in fractional shares to earn a portion of the royalties generated by popular songs.
Another alternative investment asset class available on Public is cryptocurrency. However, the selection of cryptocurrencies available on Public is quite small. If you’re someone who’s primarily interested in crypto, you’d be better off on another platform. If you’d just like to add some Bitcoin or Ethereum to your portfolio, however, Public could serve your crypto needs just fine.
2. Yieldstreet
Yieldstreet is an alternative investment platform that gives clients access to a variety of investments, including real estate (residential and commercial), art, litigation financing, sports car leasing and other less common types of investments.
Yieldstreet also manages the Yieldstreet Prism Fund, which invests in multiple alternative investments in the private markets. The fund has 1.5% annual management fees and expenses, and had an AUM of $128 million as of June 2023. At the time, the fund’s biggest holdings were real estate, private credit and legal finance investments.
The minimum investment on the products offered by the platform is usually $10,000 or higher. While many of the products offered on Yieldstreet are only accessible to accredited investors, the Yieldstreet Prism Fund is available to retail investors as well.
3. Equitybee
Equitybee is a platform where startup employees can exercise their employee stock options. By funding these employee stock options, investors can gain exposure to startups that haven’t yet gone public. In many cases, investors can get exposure to the company at prices lower than its formal valuation.
Equitybee is becoming an increasingly attractive option, as many of the top startups are choosing to stay private for longer and aren’t rushing to IPO. Some of the most in–demand private startups at the moment include Stripe, Databricks, Instacart, Discord and Chime.
While Equitybee is certainly an interesting proposition, the platform is currently only available to accredited investors and institutions.
4. Fundrise
Fundrise is an alternative investment platform that givers investors access to venture capital opportunities, private credit and real estate investments. According to Fundrise, their platform has close to 2 million users.
So far, Fundrise has deployed more than $500 million in capital into debt projects, and averaged a net interest rate of 10.8%. On the real estate side, Fundrise offers investments into multifamily apartments, industrial properties and single-family rentals.
The company also offers the Fundrise Innovation Fund, which invest in high-growth private tech companies. The fund is aimed at long-term investors, as it invests with a time horizon of 5 years and more. The Fundrise Innovation Fund has invested in companies such as Canva, Databricks and ServiceTitan, and the fund is open to all investors.
5. Percent
Percent is a platform where users can invest in private credit deals. Private credit deals are characterized by higher yields and shorter duration deals, but they are relatively risky investment opportunities. Still, they can provide some good diversification to an investment portfolio.
Private credit investments on Percent can yield up to 20% APY and can have an investment horizon as short as 1 month. Through Percent, investors can get exposure to a small and medium-sized business financing, consumer loans, corporate loans, venture debt and limited partner investing. Investment minimums on the products offered on Percent can range from $500 on the low end to $50,000 on the high end.
While Percent has some compelling opportunities, the platform is solely focused on private credit. If you want to access a broader spectrum of alternative investment opportunities, it’s probably better to look elsewhere.
6. Masterworks
Masterworks is a platform that gives retail investors access to fine art investing. According to the company’s statistics, they have over $880 million in assets under management. The Masterworks platform is accessible to retail investors, and investment minimums can get as low as $20 in some cases.
After it buys and securitizes an artwork, Masterwork plans to hold it for a period of between 3 and 10 years before selling it. Investors don’t need to wait for the painting to be sold to realize their investments, as shares in an artwork can be traded on a secondary marketplace before the painting is sold.
Fine art is an interesting asset class to consider if you’re looking to diversify your portfolio with an investment that has a low correlation to other asset classes.
7. Vinovest
The Vinovest platform makes it possible for users to invest in wine and whiskey. The minimum investment on VinoVest is $1,000. Wine investments are designed to be held for between 5 and 10+ years, while whiskey investments are meant for 2 to 10+ year holding periods. On Vinovest, users own the wine and whiskey bottles they invest in, and can have them shipped if they wish to do so.
Vinovest employs specialized algorithms to construct a portfolio of carefully chosen wines, drawing from a wealth of data, including market liquidity and numerous other data points. Additionally, they collaborate with sommeliers to assist in the curation of wine collections that align with users’ investment preferences.
The bottom line – The best alternative investment platform will depend on the asset class you want to invest in
Some of the alternative investment platforms provide many different alternative investment types, while others focus on specific types of investments such as private debt, fine art or wine. If you only want to invest in one specific type of alternative investment, choosing a “specialized” platform might be a better choice, but most investors will likely opt for platforms such as Public and Yieldstreet, which feature a broader range of opportunities.
Meanwhile, if you’re also looking for ideas in the traditional investing world, check out our article exploring the best stocks to buy now.
Source: https://coincodex.com/article/33305/alternative-investment-platforms/